BRAZIL PERSPECTIVE

Brasília, July 17, 2026. The government of Luiz Inácio Lula da Silva responded on the night of July 15-16 to the announcement by the US Trade Representative (USTR) of a 25% tariff on some Brazilian products, effective July 22. In a statement from the Secom, the Planalto calls the date a "lamentable milestone" in bilateral relations and states that it will "immediately initiate the procedures to activate the instruments provided for by the reciprocity law," unanimously voted by Congress and sanctioned by Lula in 2025. Brasília also announced that it will re-engage the WTO dispute settlement mechanism.

The Brazilian government contests the legal legitimacy of the US investigation, based on Section 301 of the 1974 Trade Act, and presents its own figures: the US has accumulated a $424.5 billion trade surplus with Brazil over 15 years, and 76% of US imports enter Brazilian territory without customs duties, with an average tariff of 3.1%. The Planalto also rejects US complaints against the Pix payment system, regulation of digital platforms, and deforestation, deeming them "unfounded."

Presidential advisors go further, calling the Washington decision "ideological" and "political," accusing the Donald Trump team of acting in "bad faith" to favor pre-candidate Flávio Bolsonaro, son of the former president. According to G1, 63 of the 78 contributions received during the USTR public hearings opposed the measure. The list of exceptions, however, preserves beef, coffee, energy, and aerospace, with approximately $1 billion in trade spared.

The stock market reacted: the Ibovespa fell 1.09% on Thursday, to 174,101 points. For analyst Bruno Yamashita (Avenue), cited by Veja, the real economic impact remains limited, with most of the nervousness stemming from political uncertainty rather than trade fundamentals. Brasília promises support via the Brazil Sovereign Plan to exposed sectors.